loan-modification

Vocabulary Word

Definition

'Loan modification' is when a lender and borrower agree to change the repayment terms or the interest rates of a loan. It usually happens when the borrower has trouble paying back the money.

Examples in Different Contexts

In banking and finance, 'loan modification' is a process where the bank alters the original terms of a loan to help the borrower avoid default. A loan officer might discuss, 'We offer loan modification programs for clients facing financial hardship, adjusting terms to better fit their current situation.'

Practice Scenarios

Legal

Scenario:

From a legal standpoint, it would be worthwhile to explore options for renegotiating certain terms of your loan agreement.

Response:

I would definitely be interested in exploring loan modification. What would be the legal implications?

Finance

Scenario:

The bank has recently introduced new policies. You may find it beneficial to consider modifying your mortgage terms.

Response:

That seems like a good idea. What steps are needed for this loan modification, and what kind of changes can we make?